Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries...
GMAT Critical Reasoning : (CR) Questions
Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.
Which of the following, if true, provides most support for the view that Mammoth Industries cannot increase its sales of telephones by adopting the plan outlined above?
Passage Analysis:
| Text from Passage | Analysis |
| Sales of telephones have increased dramatically over the last year. |
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| In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product. |
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Argument Flow:
The passage starts by giving us market context - phone sales are booming. Then it shows us Mammoth's logical response - they want to expand production and keep advertising to ride this wave of success.
Main Conclusion:
There isn't really a main conclusion here - this passage just sets up a scenario. It describes Mammoth's plan to expand production and continue advertising to take advantage of increased telephone sales.
Logical Structure:
This is more of a setup than a complete argument. The logic flow is: Market opportunity exists (phone sales up) → Company responds with expansion plan (more production + continued advertising). The question stem will ask us to find what could make this plan fail.
Prethinking:
Question type:
Strengthen - We need to find information that supports the view that Mammoth's plan will NOT work. This is essentially asking us to weaken Mammoth's plan by strengthening the opposing view.
Precision of Claims
The key claims involve market activity (dramatic increase in telephone sales), production activity (expanding production), marketing activity (continuing extensive advertising), and the expected outcome (increased sales for Mammoth).
Strategy
Since we need to support the view that Mammoth's plan won't increase their sales, we should look for scenarios that explain why expanding production and continuing advertising won't help Mammoth capture more of the growing telephone market. We need to find reasons why the general market growth won't translate to increased sales for Mammoth specifically.
This tells us that although Mammoth sells everything they produce, their market share has declined over the last year. While this shows Mammoth isn't keeping pace with market growth, it doesn't necessarily mean their expansion plan won't work. They could still increase absolute sales even with declining market share if the overall market keeps growing dramatically. This doesn't strongly support the view that their plan will fail.
This says Mammoth's inventory of phones waiting to ship has declined slightly. This actually suggests good demand management - they're not accumulating unsold inventory. If anything, this supports the idea that expanding production might be reasonable since they're keeping inventory lean. This doesn't support the view that their plan won't work.
This tells us that while Mammoth's brand name is widely known through advertising, few consumers know Mammoth owns this brand. This is somewhat concerning for brand loyalty, but it doesn't necessarily mean their expansion plan will fail. The advertising has created brand awareness, which is often the hardest part of marketing. This doesn't strongly undermine their expansion strategy.
This states that Mammoth's telephone is one of three brands accounting for most of last year's sales increase. This actually supports Mammoth's plan! It shows they're already one of the winners in the growing market, which suggests expanding production to capture more of this growth makes perfect sense. This supports their plan rather than undermining it.
This reveals that despite a slight decline in retail price, Mammoth's telephone sales have fallen in the last year. This is the most damaging information for Mammoth's plan. Even with lower prices - which typically boost demand - their sales are declining while the overall telephone market is booming dramatically. This suggests serious underlying problems with their product that simply making more units and advertising more won't solve. If they can't sell phones even at reduced prices in a hot market, expanding production will likely just create more unsold inventory.